Reference no: EM133074279
Question - At 1 October 2002 Jim had fixed assets as follows:
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Freehold Land
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Building
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Machinery
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|
Cost
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85,000
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120,500
|
74,800
|
|
Accumulated depreciation
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nil
|
128,920
|
35,600
|
Jim's policy is to provide for a full year's depreciation in the year of acquisition, but no provision is made in the year of disposal Depreciation is provided at the following rates
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Land
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nil
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|
Buildings
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written off over 25 years, on the straight line basis
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Machinery
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20% per annum, on the reducing balance basis
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During the year to 30 September 2003, Jim added an extension to the buildings at a cost of $6,800. He also acquired a new machine, by paying the dealer $9,000 by cheque and trading in an old machine for $5,500.
The machine traded in had been acquired in January 2000 at a cost of $11,000 Jim has asked why depreciation is not charged on the land, but is charged on other fixed assets.
Required -
(a) As at 30 September 2003, calculate:
(i) The value of Jim's non-current assets, before deducting depreciation;
(ii) The accumulated depreciation;
(ii) The net book value of non-current assets.
(b) Calculate the profit or loss on the machine which was traded in.